Last Wednesday, China’s Vice Premier Liu He said that Beijing would roll out support for the Chinese economy and be cautious with measures for capital markets, essentially promising the introduction of market-friendly policies that should bolster economic growth.
At a meeting of the Financial Stability and Development Committee under the State Council, China’s Vice Premier was cited by the Xinhua news agency as saying that any regulatory actions should be better coordinated and should not threaten stability. “All policies that have a significant impact on capital markets should be coordinated with financial management departments in advance to maintain the stability and consistency of policy expectations.”
“Last week’s speech from China’s Vice Premier is an important development, and investors reacted accordingly, bidding up Chinese stocks and erasing some of the losses experienced in previous weeks,” Kristina Hooper, chief global market strategist, Invesco, wrote in an insight. “I remain positive on Chinese stocks, anticipating that fiscal and monetary policy winds should prove to be effective tailwinds for the economy.”
“I would expect more transparency and less surprise around upcoming regulation, but also less actual regulation going forward — and, in general, policies that support growth and help the Chinese economy achieve its goal of a 5.5% growth rate,” Hooper continued.
Investors can gain exposure to this market with the SmartETFs Asia Pacific Dividend Builder ETF (ADIV), which offers global exposure to high quality companies. The fund invests in equities of companies domiciled in China, Taiwan, Hong Kong, Australia, Singapore, the U.S., South Korea, Thailand, Malaysia, and India, according to ETF Database.
Hooper believes global markets will continue to be influenced by central bank talk, developments in the Russia-Ukraine war, and readings of inflation and inflation expectations.
“I believe investors would be well served to anticipate volatility but not fear it, stay diversified and focus on longer term goals,” Hooper wrote.
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